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Estate Planning: Part One

Dr. Penelope Tzougros

When the sun is shining and you are having fun, it is sure hard to think of it all ending. But as responsible adults—ouch– that makes us sound old or too serious— we must take on estate planning.

Estate planning—may seem like a strange term to you. But it is financial planning shorthand for talking about what happens to your assets after you die. Whatever you own—like cars, investments, real estate, bank accounts, house furnishings—all of what was yours needs to be transferred or disposed of.

You may spend a lifetime piling up all those treasures, but since you can’t take them with you, the lawyers, accountants, financial planners, tax people, auctioneers, creditors, relatives and friends all interact to redistribute whatever you have amassed. I am not giving you legal advice, but as a financial planner, I am helping you to understand the process, and prepare for your discussion with an attorney.

Whether you have things worth a few thousand dollars, or many millions, you need a plan of action. Yes, I realize you will not be there physically to direct the activity after your death, but your Will, your Trust, will direct others; such documents are your instructions.

How do you want to be remembered? As the thoughtful person who takes charge, or as the person who just leaves a mess for someone else to clean up?

It is easier to leave a mess. Then you don’t have to face your own death. You don’t have to make decisions.

I don’t think that is the ethical or kind way to treat your family and friends. I believe that you agree with me, but you may not know what to do. So here are the first steps for you to take now.

Don’t tell me you are too busy to do an estate plan. Death is not too busy to find you. It takes some courage and maturity to face your own death, and that of those you love. For many people estate planning is a rather easy process. If you focus, you can do everything rather quickly. You will feel so relieved and strong afterwards.

When you start work, even if you’re just out of high school, you may be asked to sign up for the company’s retirement plan and group life insurance. As soon as you sign those papers and name your beneficiaries, you have begun estate planning. You have signed papers that say, “IF I die, these are the people I love, give them whatever I have.”

Step one: Legacy: Think about your legacy. There are two aspects of your legacy: what you value and what you own. Are you living your values? Are you amassing wealth and stuff?

Everyday as you interact with others you are reflecting your values, and perhaps teaching others about your values. How will people remember you? How does the stuff you have accumulated define you?

Step two: Assets: List assets and investments. Here you need to list what you own like a car, a house, retirement accounts, life insurance, bank accounts, etc. The list will include details: for example which entity holds the mortgage; what are the account numbers for your retirement and bank accounts; and at what financial institutions are they held, who are the beneficiaries, etc. If you have expensive or special items like jewelry, paintings, etc. you may want to have them appraised. You will need these lists for the legal documents that the lawyer will draw up.

Step three: Documents: Consider with a legal advisor having these three documents drawn up: Will, Durable Power of Attorney and Medical directive or Health care proxy.

With your Will, you appoint an Executor, and you explain how to distribute your valuables, and investments. The Executor is a very important person who has a key role in settling your estate.

Ask for my Checklist for an Executor to learn more about that role.

In a Durable Power of Attorney, you appoint someone to act on your behalf, for instance, if you were in a coma and the rent or mortgage needed to be paid, that person could legally deposit and sign your checks.

A Medical Directive or health care proxy gives someone the authority to tell the medical team what to do for you when you cannot speak for yourself. In addition, you may need a trust, but that is for a later discussion.

Each of these documents can make a difficult situation more manageable.

Those first three steps are critical. They set in motion the identification of your assets and the eventual distribution of them.

Please for your sake set a deadline for accomplishing these three steps. For step three, at least find the names of one or two attorneys who you can interview to judge who you would like to work with.

In the next session, we will think about how your death might impact your family and friends. We will look at the finances and the emotions.

Today rejoice in all those you love and live with energy that is the best response to Estate Planning.


©Wealthy Choices ® LLC 2011
Penelope S. Tzougros, PhD, ChFC, CLU, is Registered in all fifty states and securities offered through LPL Financial, Member FINRA/SIPC.

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